N.Z. Loan and Mercantile Agency Company.

Feilding Star, Volume XV, Issue 206, 4 January 1894, Page 2

N.Z. Loan and Mercantile Agency Company.

« (Times Correspondent.) London, November 17When, I wonder, shall I bave the pleasure of writing that the reconstruction of the New Zealand Loan and Mercantile Agency is at last an accomplished fact ? Ido think that things seem to be shaping themselves a little more definitely at present. To understand the situation it is necessary to group the parties concerned into three distinct bodies — apart from the shareholders. There are : — Ist. The secured debenture stock holders, with Baron Schroeder at their head. 2nd. One specially secured creditor, the bank of New Zealand. 3rd. The unsecured creditors. Now Baron Schroeder and his party believe themselves to have ample security for their £1,3000,000 debenture money in the shape of the uncalled capital of the company. The Bank of New Zealand knows its security to be an abundant cover, even if realised on forced sale. Therefore in existing circumstances were liquidation to be compulsory, the Bank of New Zealand certainly, and Baron Schroeder and Co. probably, would come out all right. But the prospects of the unsecured creditors would be much less cheerful. In these circumstances, it might be thought that Baron Schroeder's policy would be to press for a settlement, regardless of any interests save those of the debenture' stockholders. But there is another side to this. Great indignation prevails among the holders of unsecured debentures at the course which is found to have been pursued in hypothecating over their heads the whole of the uncalled capital as security to the favoured holders of the consolidated debenture stock. They vow vengeance if they are left out in the cold. If Baron Schroeder were to enforce his claim, it would be stoutly resisted on the part of the unsecured creditors. From what I can gather, Barou Schroeder's security is legally valid. But it is held by some that if it were contested on equitable grounds, and as giving an undue preference to particular, creditors, even if it were not upset, the matter might be fought from Court to Court up to the House of Lords, and would not be settled for at least three years, all of which time law costs to an alarming amount would be running up. The law is proverbially uncertain, and if the result should be the upsetting of the security, the last state of those debenture stockholders would be infinitely worse than the first. Then again, much unpleasantness would ensue. Nasty things might be said and thought if this select knot of secured creditors came in and " scooped the whole pool," leaving nothing whatever for the unsecured ones, who had fondly imagined themselves to stand on precisely the same footing.